Saturday, October 31, 2009

The Real Unemployment Rate in the US Economy currently sits at 16% according the Federal Reserve of Atlanta. (1) Further, no relief is in site for idle Human Capital. (2) Persistent high unemployment appears to be the norm with no current favorable factors contributing to the reduction in the number of unemployed.

Are Government Policies contributing to high persistent unemployment?

Government Policies

Stimulus Plan

An $800 Billion Stimulus plan was rammed through Congress in early 2009. The unread and un-debated Bill had a marquee of urgency. The urgency of passing the Stimulus Bill was to head off Unemployment. That the Unemployment Rate would not exceed 8% if the Stimulus Bill was immediately passed by legislatures and signed by President Obama.

Although the Stimulus Bill was unread and un-debated within Government, many outside the Government in the Private Sector did debate the Bill. Warning signs went up that the Stimulus Bill was Social Engineering, Financed Wealth and Income Transfers, and in the Macro Economic sense, not an engine to create Employment. That the Stimulus Plan was full of pork, ear marks, and based on a Political-Political design rather than a Political-Economy design.

One merely needs to look at the results to see the warning signs were correct.

Reasons for the Failure of the Stimulus Plan

Why is the American Recovery Act such a Spruce Goose? Why is the American Recovery and Reinvestment Act the Spruce Goose of all stimulus plans ever concocted? Surely $800 Billion of borrowed money will create jobs?

First of all, Keynesian Government Deficit Spending (Fiscal Stimulus) is suspect at best with very mixed results/track record. However, if one is to deploy Keynesian Government Deficit Spending the best results of past stimulus plans of this label are based on Infrastructure Spending. Building and repairing Social Overhead Capital does in fact create temporary employment and a public asset is either created or repaired.

However, only a small portion of the Stimulus Plan was based on Social Overhead Capital ($80 Billion of the $800 Billion). Why? It has to do with the designers of the Stimulus Plan. Who designed the Stimulus Plan? Very good question. Many parts of the design were concocted by the Tides Foundation in association with The Center for American Progress.(3) You mean to say Congress in association with Public and Private Sector Economists didn't design the entire plan? Correct.

The Warning Flags were real.

The Tides Foundation and The Center for American Progress influenced the Stimulus Plan? Who are they? These two organizations label themselves as liberals or "progressives". Others label them as Socialists as many of the members of these two groups are Socialists. (4) Many past members of the Tides Foundation and The Center for American Progress now hold positions in the White House.

Socialists have a grand track record in Social Engineering aka wealth and income transfers. Socialists on the other hand have no track record regarding income, wealth, and job creation. Beginning to ring a bell?

Hence we have transfers of borrowed Stimulus Funds arriving at the Public Sector that produces virtually nothing. Those transfers go to pet projects (pork barrel spending) that are dubious job creators. More transfers go to Social Welfare Programs. Meanwhile, on the Federal Level employment is expanding based on borrowed Stimulus Funds. Expanding a sector that produces little.

Liberal Economists believe that transfers of funds to Private Welfare Programs create a situation where the transferred funds will immediately be spent (a component of Social Engineering). The theory is based on the notion that low income or no income recipients will spend 100% of their funds and save zero. That 100% of the transferred funds will be spent hence creating a multiplier effect thus stimulating the economy. However the theory has a major flaw: low income recipients generally spend their funds on "staples". Low income earners do not buy new vehicles, contract for a home to be built, invest in new business ventures, and other dynamic economic activities that truly have multiplier effects.

The tax cuts associated with the Stimulus Plan are doomed to fail. Why? Any positive economic effect associated with Tax Reductions is closely associated with "expectations". That is, temporary tax cuts have basically no effect as consumers and businesses realize the short term duration on any additional disposable income and hence make short term type purchases that match the short duration of additional disposable income. Whereas long term tax cuts (e.g. reducing Marginal Income Tax rates for the next 10 years) causes consumers and businesses to make long term purchases such as home, vehicles, and capital investment in business as the consumer or business matches long term purchases to the long term increase in disposable income.

Meanwhile, tax revenues at all levels of government are plummeting at historical rates. The answer to plummeting tax revenue? Taxes are increasing on the State and Local levels to support the bloated size and scope of these governments. The increased taxes then reduce disposable income of consumers and businesses which consequently reduces Private Sector Demand for goods and services.

On the Federal Level tax revenues are plummeting as well. However, the Federal Government continues to spend at unprecedented levels (spending increasing at an increasing rate). Spending and tax revenues are on a course of complete divergence. The result is a swollen deficit.

Enter the non-renewal of the Bush Administration across the board tax cuts. Soon all tax payers will face an across the board tax increase. This creates the expectation of long term higher taxes and consequently changes consumer and business consumption behavior (the opposite behavior of long term tax cuts mentioned above).

However, the specter of even more tax increases are affecting consumer and business behavior. The spending increases by the Federal Government, the constant need to borrow funds by the federal government for financed spending such as the Stimulus Plan and general revenue needs, the specter of higher energy taxes through Cap and Trade legislation, talk of a Value Added Tax as an additional tax, and finally the increased tax burden of Socialized Medicine are causing consumer and business long term spending behavior to be paired back.

Oddly the Consequences are Known

The consequences of the above mentioned Government Behavior is well known. Huh? The lessons of the Great Depression have been enumerated by economists through empirical study. Thousands of empirical studies have concluded the errors of the Great Depression:

(1) Keynesian Government Deficit Spending (fiscal stimulus) creates temporary jobs creating temporary stimulus. When the deficit spending ends, the temporary jobs end as well as the temporary stimulus,

(4) repeating 1-3 above, over and over again, as was done in the Great Depression, yields the same result: continued recession.

Milton Friedman's Fourth Category of Spending

Milton Friedman basically said when you spend someone else's money, you have no rational interest in either value or quality. (5) (6) In other words, when the government taxes you, brings in the revenue, when the time comes to spend that tax revenue, value and quality are Job 57. Hence Keynesian Government Deficit Spending (Stimulus) has inherent value and quality problems.

Enter "Jobs Saved"

In the field of Manpower Economics and Labor Economics you are either employed or unemployed. Yes, you either have a job or you don't have a job. Sure, you can be underemployed, structurally unemployed, part-time employed and a multitude of sub-categories of employment and unemployment. However, at the end of the day, you either are employed or unemployed.

Heard the phrase "Jobs Saved"? (7) Guess what? No such term or statistic or measurement exists within the field of Economics. Huh?

When the Spruce Goose of all stimulus plan fell on its fat little porker , income transfer, wealth transfer face, the Obama Administration, through the Council of Economic Advisers, created the ultimate Political Speak Phrase "Jobs Saved".

Jobs Saved is a non-statistic statistic. Its unmeasurable, un-comparable, and basically fantasy. Why did they create "Jobs Saved"? One must remember that the $800 Billion stimulus plan, if passed immediately, would then cause unemployment to top-off at 8%. When the 8% target was unmanageable, enter "Jobs Saved". (8)

Jobs Claim

The employment picture created by the stimulus plan is so bleak that the Obama Administration has begun to grab at straws. "30,000 jobs created" was the reported headline and the Obama Administration lauded the report (9). Unfortunately 30,000 is an anemic number of jobs and better yet the report was refuted, called "way off the mark" a week later. (10)

Subsequently the White House announces the Stimulus Plan saved 650,000 jobs (jobs saved non-statistic statistic yet again). (11) Somehow borrowed money, sent to the States on a temporary basis, has saved jobs? Or has borrowed money been used by State Governments to subsidize budgets that were already out of control?

Please remember, no jobs were saved. You are either employed or unemployed. However, take a closer look at the report and what jobs are referred to within the report? Public Sector jobs. (11) Hence Government Workers remained employed based on unsustainable State Budgets temporarily funded by borrowed money. One might also point to Government Workers, unionized in many states, are predominantly supports of the Obama Administration.

Meanwhile Back in the Unemployment Line

Creating the phase "Jobs Saved" and lauding a phony job report or pointing to borrowed money propping up unsustainable State budgets funding Government Jobs doesn't really help the unemployed.

What is the Jobs outlook for the Unemployed? Not too bright. (2) (8) (12)

With the average work week at 33.2 hours the average employer has plenty of room to expand the utilization of current employees before any expansion of total employment. (8)

If demand does expand, and employers do increase the average work weeks to 40 hours, an employer will opt for over time for the current work force rather than expand the number of workers. Why? The employer wants to be certain that any increase in demand is sustainable and not a false signal. (13)

An employer also realizes that the laid off workers were the most marginal workers. In other words, employment was reduced at the margin, leaving the most productive workers retained. It can be argued some workers laid off were in marginally profitable lines of business while other workers were laid off from core profit business. The marginally profitable line of business would have to show even more robust sustainable growth before human capital is added back in comparison to employment in a core profit business.

Gross Domestic Product (GDP) can Rise and High Unemployment can Persist?

GDP can grow, however, if human capital is under utilized (current 33.2 hour average work week) a slack or lag occurs in labor markets and persistent high unemployment can exist. The slack or lag is elongated by the determination of employers, as mentioned above, regarding GDP growth and the ability of GDP growth to be robust and sustained. Hence GDP can show positive results while unemployment can remain persistently high.

What if Demand grows in an anemic fashion? That is referred to as a Jobless Recovery.

Exit Zero

If you are currently unemployed, you have reached Exit Zero on the unemployment highway. Exit Zero is the last exit before unemployment Armageddon.

Discouraged workers are increasing at an increasing rate (those giving up on finding a job). The average length of time unemployed workers have been drawing unemployment benefits is at an all time high (week after week after week these workers can not locate a job).

The Stimulus Plan is a bust accompanied by made up statistics and made up economic criteria. Private Capital Formation leading to private sector job creation is anemic. Rising taxes are depressing consumption dynamics.

The average work week at 33.2 hours means employer will utilize current workers before hiring new workers.

Friday, October 23, 2009

Preexisting conditions and buying insurance after-the-fact are two health insurance subjects that have received plenty of press coverage recently. These two subjects need examination.

Commonly Used Definition of Preexisting Conditions

Before you examine "preexisting conditions" within health insurance, you need to look at a generally used definition of preexisting conditions:

Preexisting conditions means an injury or illness:

(a) for which a covered person received medical advice of treatment with in X amount of months immediately preceding the effective date the covered person became insured under the policy; or

(b) which in the opinion of a qualified doctor:

(1) probably began prior to the application effective date the covered person became insured under the policy,

(2) manifested symptoms which would cause an ordinary prudent person to seek diagnosis or treatment within the 12 months immediately preceding the applicable effective date the covered person became insured under the policy.

Why would such a definition exist within a health insurance policy? How come the subject of preexisting conditions occurs within health insurance?

Private Insurance Formation (Private Welfare Plan)

Before we go further into the subject of preexisting conditions, we must examine the reason we organize a private welfare plan and the member characteristics making up the private welfare plan.

One must remember that private insurance can be defined as a private welfare plan. That is, a group of private individuals create a pool of resources to benefit those members (welfare of the group) suffering an insured loss. Hence when you see the logo for XYZ Insurance Company and their trademark slogan and even little commercial jingle, these sometimes very large corporations, at the end of the day, are merely private welfare plans.

The welfare of the group is the reason the private insurance was organized. The pooling of resources among the members allows the group to pay losses that any single member likely can not pay with their own individual resources. Simplistically, 5000 individual members contributing $1,000 each creates a pool of resources of $5,000,000. The pool of resources ($5 million) is used to pay covered losses of members (welfare of the private group). A single member with a loss of $50,000 likely can not easily pay the loss himself/herself, but the pooled resources can easily pay the loss.

Enter Insurance Theory. The risk of the group of members, creating the private welfare plan, needs to be made up of homogeneous risk exposure units spread over a wide geographic area. What does that mean? Homogeneous risk exposure units are categories of like kind items such as: residential homes, commercial buildings, private passenger vehicles, etc.. The risk exposure needs to have similar characteristics and similar measurable risk attributes. Spread over a wide geographic area? This concept means you do not want all the risk grouped into a small contiguous area that can suffer a dramatic loss from one single event e.g. a tornado hits one town and every home in the town, is in fact, a member of the same private welfare plan. The welfare plan's resources are then wiped out in one single loss.

Please remember the reason the group was formed was for the welfare of the group. If additional members are added to the group, the group must have some sort of membership criteria aka underwriting. Do we add only members with well maintained risks and few losses in the last five years? Or do we add new members with poorly maintained risks and immanent losses?

You can go to the extreme and ask: do we add a homeowner member, in a home insurance private welfare plan, with the home currently on fire? Of course not, as it adversely impacts the welfare of the group's resource pool. The mere idea is an attempt not to measure risk. If you added homes currently on fire, the resource pool would be adversely affected and membership fees (premium) to the particular private welfare plan would certainly rise.

Classic Example of Poor Member Selection Criteria

When National Flood Insurance was proposed and eventually passed, the insurance industry was invited to participate. The insurance industry, after a period of time of participation in framing the Flood Insurance Plan, pulled out as their ideas were ignored.

One of the selection criteria problems was that you could apply for a policy, with little or no waiting period, then cancel the policy and receive a refund for the unearned premium.

Interesting happenings followed:

(1) Spring comes and the head waters of the Mississippi River begin to fill up with the water from thawing snow,

(2) if the thaw is too quick, the Mississippi begins to flood,

(3) the flood waters move down the Mississippi,

(4) people in St. Louis and other river communities watch the weather forecast/flood forecast,

(5) if the flood water appear to threaten them, they buy coverage,

(6) if the flood waters pass by, they cancel and collect the remaining premium as a refund,

(6a) if damage occurs, they collect the coverage then cancel the policy to receive the remaining premium as a refund.

Adverse Selection in regards to Membership Criteria

Suppose for amoment you have a private welfare plan and each member's dues/premium is $1,000 per year. However, the membership criteria is suddenly changed to very lax standards.

The risk characteristics of the original group of members are soon changed to a much different set of risk characteristics. This new set of risk characteristics leads to more claims. The increase in claims cause the claims-resource-pool to fall. In order to replenish the resource pool (that pays claims) premiums must rise to $1,000 plus X.

Many of the members do not like the new premium of $1,000 + X. These members seek out another private welfare plan with a lower premium. The alternate private welfare plan with lower premiums has stricter membership criteria. Those who can qualify move their risk to the new plan. Meanwhile, the old plan now has falling membership, the characteristics of the remaining members of the original plan deteriorates as the low risk members, who can qualify elsewhere, flee the plan. Hence we have a lower membership number with higher risk characteristics causing more losses to be paid causing the premium to increase to $1,000 + X +Y.

You can quickly see that without some sort of intervention, the escalating premium due to the increase of risk leading to increased claims causes the less risky members to leave. You eventually have a small group of very risky members with an unaffordable premium.

Back to the beginning: Preexisting Conditions and Buying Insurance After-the-FactIn the currently proposed socialized medicine scheme your have surely heard how that bad old insurance company uses preexisting conditions. Ah, the evil of it all!

Or, just maybe, preexisting conditions and other underwriting criteria are used to protect the risk integrity of a private welfare plan. In other words, underwriting is used to protect the members (you) against adverse selection and escalating premium costs.

Really? Sure!

Lets say Sam down the street is always buying a new car. Little-do-you-know, but Sam's ability to buy those new cars on a regular basis is because Sam doesn't pay $600 a month for health insurance. Sam's new car is a shiny BMW. Sam loves the car so much, he drives it night and day. Sam drives so much he ends up cross-eyed. Well, that will not do as driving a BMW while cross-eyed really lowers the enjoyability of the driving experience.

Sam learns that the government has dumped the preexisting clause regarding health insurance. Sam signs up for health insurance and gets that cross-eyed problem fixed for $50,000.

Once the problem is solved, Sam realizes that having the BMW and health insurance is cramping his style. Sam learns that his $600 a month premium cost will only equate to the newly government imposed $100 per month fine for not owning health insurance. Hence he dumps the health insurance. Why not Sam thinks! Next time I'm sick I'll merely sign up for health insurance again! Plus the $100 fine is surely cheaper than $600 health insurance premium!

Thursday, October 8, 2009

The Max Baucus (D-MT) Socialized Medicine proposal will be voted upon this week in the US Senate. The plan paves the way for the following wonderful attributes:

(a) price distortions, demand shock, and over utilization, leading to long waits for services

(b) two to one pricing scheme with the younger insureds subsiding older insureds,

(c) government making decisions on cost effective procedures,

(d) rationing and cascading rationing due to price distortions,

(e) low out of pocket costs leading to cascading over utilization,

(f) increased costs,

(g) higher taxes passed onto consumers,

(h) reduces benefits to the elderly,

(i) vast expansion of the welfare-state via Medicaid with State Governments picking up the tab,

(j) another un-read, not available to the public, rammed through Bill.

Feeling warm and Fuzzy?Feeling like you will pay more for less?

The half-baked Baucus Bill, scored by the Congressional Budget Office (CBO), based on "conceptional legislative language"is going to save money? The plan supposedly costs $829 Billion dollars over 10 years, yet reduces the deficit by $81 billion over 10 years? Hmmm. Unfortunately, the major increase in taxes are left out of the headline. Increased taxes are a cost savings? George Orwell would be proud: savings equals increased cost which increases taxes, consumers ultimately pay the increased tax, which means you saved money (1) (2) (10). Pure genius it is!

Why is the Baucus Bill half-baked? First of all the Bill will never see the light of day (1). Secondly, the CBO scoring was based on "conceptional legislative language". That means the CBO scored the bill on highly dynamic assumptions that can change at the drop of a hat. Its more like the CBO scored a moving target, the moving target changing in size and scope, with the moving target changing speed as it crosses the horizon. The only scoring approach you can use on a target like that is the old shotgun scoring approach. That is to say, the CBO numbers are basically real, real, real fuzzy math.

Regardless of the validity of the CBO scoring, lets talk new taxes and new fees. That's right, the half-baked Baucus Bill has plenty of new taxes and fees. (1) (2) (10) Like all Politicos, the headline numbers are lauded but the new taxes and fees are buried. Plus national polling shows the majority of Americans will only support health care/insurance reform if no new taxes are involved. (3) Polling also shows that the majority of Americans do not support monetary penalties (tax) for not buying health insurance. (4) (7)

Besides the new taxes and fees, what about those Medicare cuts? They are going to cut Medicare payments, cut corruption in Medicare, yet not reform Medicare? Huh? (5) Those reduced Medicare payments have no effect on the elderly? (6) That the reduced Medicare payments are not an indirect tax on the elderly?

The public has decided that ramming through un-read legislation is ridiculous. After the Spruce Goose of all stimulus plans was voted upon and passed without Legislators reading the bill and the consequential 16% real unemployment rate. Then Cap and Trade rammed through the House of Representatives with out being read by Legislators. The result was the eruption of a major public battle cry: for Legislators to make Bills public, read the Bill, and debate the Bill before voting.

When the House of Representatives made their Health-Care/Insurance Reform public, the blow back from the public was amazing. Matter-of-fact, some one million people marched on Washington D.C. in July with many carrying signs reading "Read the Bill".

Guess what? The Public and Legislators will not get to read the Baucus Bill! (8) Why? Because that would take time, public input, and of course that nasty idea of "debate". These are all considered "time wasters" by Progressives/Socialists who want the Health-Care/Insurance reform Bill passed by Thanksgiving. (9) In other words, more rammed through Legislation. Recognize the song just a different beat?

Saved the best for last. The Baucus Bill adds $37 Billion to State Budgets as it vastly expands Medicaid. That's really good news to State Governments that are already bankrupt. You may find you are a citizen of one of the 50 States. If so, fasten your seat belt. Also enjoy your ride as you will also be subsiding Nevada, Michigan, Oregon, and Rhode Island as they are exempt from participating in the the $37 Billion price tag for five years. Huh? Thank Mr. Harry Reid (D-NV)for that little amendment. (11)

Saved the best-of-the-best for the very last. One of the increased tax revenue items in the Baucus Bill is a tax on "Cadillac Health Plans". Who has these Cadillac Plans? Most Unions negotiate for Cadillac Plans for their members. Oh no! Unions are upset about this tax! Enter the Top Socialist of them all: Charles Schumer (D-NY). The arbitrary dollar figure assigned to Cadillac Plans ($21,000 per year) has been increased to a threshold of $25,000 in Massachusetts and other highly unionized states. (11)

One can only wonder why our Legislators have such a abysmal approval rating and the Public doesn't trust the Government. Go figure.

Tuesday, October 6, 2009

Within the field of Health Insurance, its well known that the cost of Health Insurance is a direct reflection of the cost to provide Health Care.

Conversely, you can argue that the existence of Health Insurance creates a third party effect where you have the effect of spending someone else's money as in the Four Ways Money is Spent put forth by Milton Friedman. (1) The existence of Health Insurance clearly does create inefficiencies in expenditures.

However, at the end of the day, the cost of Health Insurance is more directly related to the cost of providing Health Care.

Looking back several months, the conversation in Congress was “Health Care Reform”. That discussion morphed into “Health Insurance Reform”. Regardless of the title of the discussion, its clear the buzz phrase is “rein in costs”.

One must further remember that Legislators are not students of the Field of Insurance. The most glaring example of insurance naivety of politicos, showing they have no grasp of the concept of Insurance, is the discussion leaving “Health Care Reform” and becoming a discussion of “Health Insurance Reform”. It’s the classic case of the-cart-before-the-horse. That is, reforming Health Insurance does absolutely nothing to address the buzz phrase “rein in costs”.

Think of it another way: since the cost of Health Insurance is a direct reflection of the cost to provide Health Care, then the cost driver (providing Health Care) is overlooked in “Health Insurance Reform”. You are trying to reform the final result of a formula without reforming/changing the components of the formula. Hence, Hospital Costs, Doctor Costs, Drug Costs, etc. are directly related to Insurance Costs. How do you reform Insurance Costs without reforming the components that yield Insurance Cost?

Its not to say that increased competition among private insurers and more policy/coverage choices for consumers through deregulation of state required benefits would not yield price competition. But the competition among provides and more affordable coverage choices can only go so far in reducing costs. Its reducing costs at the margins.

Another question arises: is the cost to provide Health Care actually the direct reflection of the Demand and Supply for Health Care. In other words, its very, very possible that the price of Health Care is an accurate reflection of the market. If the cost is accurate, regardless of the outcries that Health Care is too expensive, then your only recourse is to again reduce costs at the margins. That is, the “core costs” can’t be reduced.

Enter the wonderful world of Price Controls, Regulations, Bureaucracies, and homogeneous product. These four horsemen of failure have already been proposed. When Politicos can’t solve a problem that they set out to solve, and when the results of the market place are not to their tastes, they love to repeat the failure of Price Controls and its cousins Regulations, Bureaucracies, and single product for all. (2)

Price Controls always end in miserable failure. Further, when Demand and Supply are not allowed to meet at Price, when Price is set at an artificial level, then price is not the allocation agent. Rationing becomes the allocation agent of Demand and Supply.

The thousand tangent discussion occurring at the Insurance Puzzle Palace on the Potomac needs to be immediately stopped. Erase the chalk board. Start over again as the debate is completely off track and completely off target in regards to "reining in costs".

The post discusses the fallacy in the argument that compulsory health insurance and state mandated compulsory auto insurance are one in the same. The argument was put forth in some circles, then consequently used as a “talking point” by Mr. Obama in regards to the “obligation” to purchase health insurance being the same as the “obligation” to buy auto insurance. The fallacy of the argument is the failure to understand the obligation aspect of the insurance.

However, the argument has taken on a new dimension.

When health-care reform (aka health insurance reform) is debated you'll notice a new argument that the public will be forced/obligated to buy health insurance which is unconstitutional and the proposed penalty for non-purchase is unfair. Under the proposed health-care legislation, failure to buy health insurance results in a significant fine and potential jail time. Forced purchase of any item, including health insurance, is unconstitutional. That the significant fine and potential jail time is a sever penalty on the middle class, and an even worse penalty on the poor.

The rebuttal to the argument is: then you think compulsory auto insurance should not be the law and the public should have no protection?!?

The rebuttal is extremely flawed. Its a complete disconnect. Why is the rebuttal flawed? The flaw is the misconception of the term “obligation”.

Many people think insurance is insurance. That is, that the many types of insurance are basically generic. Hence the compulsory auto insurance state law requirement is exactly like, akin to, and the same as compulsory health insurance.

Compulsory auto insurance laws are required due to the bodily injury and property damage liability arising from the operation of vehicles. That is, the required auto insurance coverage mandated by state law is for the benefit of an exogenous party. Your "obligation" is that of liability to another party.
Health insurance is the exact opposite of compulsory auto insurance in regards to who benefits and what obligation exists. That is, health insurance is purchased for the direct benefit of the policy owner. Health insurance is not purchased for the benefit of an exogenous party. The "obligation" is to yourself. Your failure to purchase health insurance does not create a bodily injury or property damage liability to an exogenous party.

Hence compulsory health insurance being used as a direct comparison to compulsory auto insurance ignores the obligation aspect and the party that benefits from the insurance.

Going back to the rebuttal mentioned above, the failure to buy health insurance has nothing to do with the public protection aspect of the rebuttal argument. There is a clear and major difference between the obligation to the “public” being protected against negligence and the obligation of the “public” being required to buy health insurance for their own benefit.

Health insurance has absolutely nothing to do with public protection against negligence. That is, within compulsory auto insurance the public protection element is negligence and the public’s recourse is the insurance. In health-care/health insurance reform and consequently the argument for compulsory health insurance, where is the public protection element? The public suffers no negligence and hence does not need insurance as a recourse for negligent acts.

Hence the rebuttal mentioned above, then you think compulsory auto insurance should not be the law and the public should have no protection, holds no water as the "public protection" aspect is confused in regards to the separate and distinct points of obligation to the public and the obligation of the public.

Therefore, compulsory auto insurance and compulsory health insurance are two separate and distinct concepts that are most comparable in their many differences and very few similarities.

About Me

BS Economics, cum laude, Private and Public Sectors, 1979, West Virginia University, Morgantown, WV.
Undergraduate Minor in General Insurance.
Chartered Life Underwriter (CLU), Huebner School of Economics, American College, 1992, Bryn Mawr, PA.
Life Underwriter Training Fellow (LUTCF), 1986, National Association of Life Underwriters, Washington D.C..
Currently enrolled and completed one half of Chartered Property and Casualty Underwriter (CPCU) from the American College.
38 years insurance industry experience.